DRAFTING GROUP II

Financial Resources and Mechanisms: Delegates agreed to the Co-Chairs text in
40, Financial resources and mechanisms play a key role in the implementation
of Agenda 21, to be followed by Paragraph 33.13 of Agenda 21. A G-77/CHINA
amendment was bracketed: Hence all financial commitments of Agenda 21, particularly
those contained in Chapter 33, and [especially] (G-77/CHINA) [including] (CHAIR)
those [objectives] (EU) related to the provision of new and additional resources that are
both adequate and predictable, need to be urgently fulfilled. The US, supported by the
EU, objected to the special reference to new and additional resource commitments.
CANADA said his country was unlikely to fulfill the Agenda 21 ODA commitment of
0.7% GNP urgently. The G-77/CHINA could not accept the EUs reference to new and
additional resources as objectives rather than commitments. Chair Amorim said he was
very disheartened and that some delegations were not in a mood to negotiate. Delegates
agreed:Renewed efforts are essential to ensure that all sources of funding
(deleting international and domestic as well as private and public) contribute to
economic growth, social development and environmental protection (CHAIR), in the
context of sustainable development and implementation of Agenda 21" (US). The US
said that if delegations continued to treat the words sustainable development" as a
pariah there would be nothing to discuss.

In 41 (ODA), the US and G-77/CHINA bracketed a revised G-77/CHINA
proposal noting that, for developing countries, ODA remains a main source of external
funding and is essential (CHAIR) for implementation of Agenda 21. They also
bracketed a sentence in which the EU proposed now, the US short and medium term
and the Chair at this stage for the G-77/CHINAs text that ODA cannot be replaced by
private capital flows. An EU proposal calling for recipient and donor countries to
address the underlying factors for the decrease in ODA was altered to state: intensified
efforts should be made to reverse this trend, taking into account the need for effective
utilization of ODA (G-77/CHINA) and in the spirit of global partnership, underlying
causes of the decrease should be addressed by all countries (CHAIR). The US supported
and the G-77/CHINA altered text calling for strategies to increase support for aid
programmes and for revitalizing the commitments donors made at UNCED.

In 42 (role of ODA), delegations agreed that ODA plays a significant role,
inter alia, in capacity-building, infrastructure, combating poverty, environmental
protection and promoting institutional development in developing countries, and has
(Chair) a crucial role in the least developed countries. AUSTRALIA highlighted ODAs
catalytic role in encouraging, where appropriate, country-driven policy reform efforts.
The G-77/CHINA expressed concern about conditionalities and bracketed this text.

On a G-77/CHINA-proposed paragraph 45, on multilateral financial institutions
(MFI) concessional funding, the US objected to an implication that developing countries
are totally dependent on external resources and agreed to replace achieve with fully
implement sustainable development. Text on MFIs and stringent conditionalities was
replaced with a call on such institutions to continue (US) to respond to the development
needs and priorities of developing countries. A call on developed countries to urgently
meet commitments under the 11th replenishment of the IDA was accepted. In text on the
GEF, CANADA, the US and AUSTRALIA supported EU text calling for satisfactory
GEF replenishment and flexibility in its mandate. The G-77/CHINA called for adequate,
sustained and reliable funding, review of its decision-making process and expansion of its
scope and coverage. Both texts were bracketed. G-77/CHINA-proposed text on UN funds
and programmes was bracketed after alternative amendments were submitted by
AUSTRALIA, the US and the EU.